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part 1.international accounting (IASB) Flashcards

1
Q

IASCF (was renamed IFRS

A

is the parent of IASB

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2
Q

objectives of the IFRS

A
  • to develop a single set of financial reporting standards used worldwide
  • to take account of, as appropriate, the needs of a range of sizes, and types of entities in diverse economic settings
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3
Q

IASB

A

is like FASB

IASB has no enforcing power

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4
Q

IOSCO

A

is the international standard setter for securities markets

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5
Q

IFRS

A
  • oversees
  • review effectiveness
  • finance IASB
  • appoints members to IASB
  • parent of the IASB
  • not for profit private sector organization
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6
Q

IASB

A

establishes IFRS

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7
Q

IFRS interpretation committee

A

similar to FASB emerging issues task force

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8
Q

IFRS advisory council

A

advises the IASB

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9
Q

IFRS

A

are more principles based (objectives oriented)

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10
Q

small and medium sized entities

A

one single standard for companies that are not public traded

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11
Q

IFRS standard setting process

A 
research
discussion paper
proposal
exposure draft
published IFRS
post-implementation 
review
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12
Q

convergence agreement between FASB and IASB

A
  • norwalk agreement in 2002 formalized the commitment to covergence between FASB and IASB
  • there are still differences
  • SEC eliminated the requirement to reconcile from international GAAP to US GAAP in 2007 making it easier for foreign co to list on US exchanges
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13
Q

first time adoption of IFRS

A
  • the first reporting date: is the year end date for the period for which IFRS is first applied
  • transition date: is the ongoing date of the earliest period for which full comparative financial statement under IFRS are presented.
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14
Q

IFRS

A

upon adoption of IFRS the entity must present reconciliations of US GAAP to IFRS to explain the impact of the adoption on equity and comprehensive income

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15
Q

mandatory exceptions to the retrospective application of IFRS

A

. derecognition of financial assets and liabilities
. hedge accounting
. assets held for sale and discounted operations
. certain aspects of accounting for non-controlling interest
use of certain estimates

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16
Q

IASB framework

A

is similar to FASB

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17
Q

IFRS conceptual framework

A

is a point of reference

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18
Q

IFRS objective

A

to provide f/s that present a true and fair view of the entities performance

19
Q

IFRS primary characteristics

A
  1. faithful representation:
    . completeness
    . neutrality
    . free from error
  2. relevance
    . predictive value
    . confirmatory value
    . materiality
20
Q

IASB

A

has 2 assumptions:
. accrual method is used
. the entity is a going concern

21
Q

IFRS elements

A 
assets
liabilities
equity
income
expenses
22
Q

IFRS elements are included in f/s

A
  1. if it is probable that a future economic benefit associated with the item will flow to or from the entity
  2. the item has a cost or value that can be measured with reliability
23
Q

IASB income

A

includes revenue and gains.

24
Q

IASB expenses

A

includes expenses and losses

25
Q

IASB

A

defines income and expenses in terms of assets and liabilities

26
Q

IFRS

A

has not concept comparable to other comprehensive basis of accounting and personal f/s

27
Q

IFRS

A

has standard for small and medium sized entities

28
Q

who needs or uses IFRS for small medium entities

A
  1. any entity that does not have public accountability:
    . securities not publicly traded
    . not a financial institution
  2. and is required or chooses to produce general purpose f/s
    . general purpose f/s presents fairly financial position, results of operations and cash flows
29
Q

who are the users of small medium entities f/s

A

. lenders, vendors, credit rating agencies
. customers, family investors
. short term cash flows, liquidity, solvency

30
Q

IFRS for small medium entities

A

are not OCBOA

31
Q

IFRS for small medium entities

A

are GAAP for qualifying companies

32
Q

entities that cannot use IFRS for small medium entities

A

. entities that issue instruments in a public market
. entities that hold assets in a fiduciary capacity: banks, insurance companies, mutual funds, not for profits and governmental entities

33
Q

U.S. companies

A

can use IFRS even if they don’t engage in international transactions

34
Q

IFRS for small medium entities

A

does not permit LIFO cost in valuing inventory

35
Q

U.S. companies

A

can use IFRS as an alternative to using OCBOA

36
Q

IFRS for small medium entities major characteristics

A

. disclosures are simplified in a number of areas including pensions, leases, and financial instruments

. LIFO is prohibited

. goodwill and indefinite life intangible assets amortize over a period not exceeding 10 years

. depreciation is based on a components approach

. a simplified temporary difference approach to income tax accounting

. reversal of impairement charges, if certain criteria are met is allowed

. accounting for financial assets and liabilities makes greater use of cost

. no disclosures for earnings per share and segment disclosures

37
Q

various types of GAAP which can be used by a U.S, company

A

. u.s. GAAP
. U.S. OCOBOA
. IFRS
. IFRS for small medium size entities

38
Q

IFRS general purpose f/s

A

. comparative periods are required

. changes in owner’s equity must be presented in a separate statement

39
Q

IFRS income statements

A

. no requirements on reporting special items

. dividends per share require disclosure

40
Q

IFRS statement of comprehensive income

A

. permits re evaluation of PPE through OCI (reclasification of PPE revaluation must also flow through OCI not NI)
. per share measures are not prohibited

41
Q

IFRS statement of cash flows

A

. interest paid - operating or financing
. interest received - operating or financing
. taxes paid - operating - in financing or investing if specifically identified with an item
. dividends received - operating or investing
. dividends paid - operating or financing
cash and cash equivalents - may include bank overdrafts

42
Q

IFRS f/s includes

A 
. statement of financial position ( balance sheet)
. statement of comprehensive income
. statement of changes in equity
. statement of cash flows
. notes
43
Q

IFRS requires firms to analyze expenses either by:

A
  1. function: focus on the activity to which the expense relates: exp: cost of sales, distribution costs
  2. nature: focuses on the type of expenses. exp: changes in inventory of finished goods and work in progress, employee benefit expense, depreciation and amortization expense

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